$500 million worth of traders liquidated as Bitcoin and other cryptocurrencies fell
Bitcoin’s (BTC) recent plunge from all-time highs claimed its victims: leveraged traders. These investors lost a massive amount of money with crypto’s downward move.
According to data from Coinglass, traders recorded liquidations totaling close to $500 million in the past 24 hours. The adjustment followed a pullback in the price of BTC, which rose from a new all-time high of $124,400 to the current $118,800.
At the time of publication, the Price Calculator shows that BTC is trading at $118,907.
Despite the magnitude of the move in nominal terms, the drop represents a 4.5% correction, keeping bitcoin’s uptrend largely intact. However, for traders with leveraged positions, the pullback did imply immediate losses.
CoinGlass’ chart, which collects aggregated data from all cryptocurrencies and not just Bitcoin on major exchanges, shows that much of the liquidations were concentrated in long positions. This means that traders who were “betting” on an increase in prices had their operations automatically closed because they could not cover the guarantees required by the platforms.
Liquidations are a common mechanism in markets with high leverage and high volatility. When the price moves rapidly in the opposite direction to a trader’s “bet,” the exchange executes the sell or purchase necessary to close the position, preventing further losses for the platform.
This time, bitcoin’s previous rally to an all-time high incentivized the opening of long positions with high leverage, taking advantage of the uptrend. However, the downward turn took those who were expecting an immediate new boost by surprise. The result was a series of chained liquidations that affected both bitcoin and the rest of the market.
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